Management Maneuvers—Selling the CompanySteps in the Merger/Acquisition Process

Companies have been bought and sold for centuries and a
sophisticated merger and acquisition (M&A) industry has
developed to cater to the needs of buyers and sellers in all
lines of business. The process of selling a company is well established (it’s
actually changed very little during this time) and has a
gestation period of about 9 months from commencement to close.

Some deals have been known to close quicker than this—but when
starting out, it’s impossible to predict how long the whole
process will take for your company, with any degree of accuracy
. Some of these
activities, like the selection of the intermediary and the
preparations to sell the company, are under your control and it
is possible to estimate how long they will take, however, as
soon as potential acquirers are involved, the timing is somewhat
out of your hands. Some acquirers are geared up to move more
quickly than others. The buyer is likely to be a public company
with fiduciary responsibilities to conduct due diligence checks
that force it to drag out the process for several months. Unless
you work hard to maintain momentum, the whole process can easily
grind to a halt.

With the high-tech IPO market way below the heady days of the dot com boom, a
sale of the company has become the most likely exit for most startup ventures,
and entrepreneurs must understand the process of selling the company, and how
the business might be valued.